Eleventh Circuit Issues Important Decision on Standing to Assert Lanham Act False Advertising Claims

On June 22, 2007, the Eleventh Circuit issued a noteworthy decision concerning standing to sue for false advertising under the Lanham Act. In Phoenix of Broward, Inc. v. McDonald’s Corp., __ F.3d __, 2007 WL 1791886 (11th Cir. 2007), the Eleventh Circuit affirmed the dismissal, for lack of standing, of a false advertising suit against McDonald’s by a Burger King franchisee that was a direct competitor of McDonald’s. In reaching this decision, the Eleventh Circuit declared that it was joining the Third and Fifth Circuits in applying a five-factor test to determine whether a plaintiff has so-called "prudential" standing to sue under the Lanham Act, and rejected both the "categorical approach" adopted by the Seventh, Ninth and Tenth Circuits, which approach requires the plaintiff to be—and arguably is satisfied if the plaintiff is—a competitor of the defendant, and the more liberal standard for Lanham Act standing adopted by the First and Second Circuits.